FOR nearly 20 years Alan Greenspan, as head of America's central bank, was the most powerful economic central planner the world has ever seen. What did he do? Roughly twice a year, the Federal Reserve chairman had to make a substantive decision about whether to raise, lower or keep the level of U.S. interest rates the same. Why is that important? To lower interest rates is to make the future more valuable relative to the present; to raise interest rates is to make the future less valuable.

In a scenario that continues to play like a broken record, blue chip stocks soared Monday on expectations of renewed interest rate cuts. The Dow Jones industrial average jumped 40.70 points, or 1.4%, to 3,045.62, after Federal Reserve Chairman Alan Greenspan hinted that lower interest rates may be needed to help the economy. The Dow's gain was accompanied by only moderate trading volume. Still, it was the largest one-day point rise since Aug. 21, when the index leaped 88.10 points to 3,001.

World stock markets fell sharply Tuesday as euphoria over the tranquil changeover to year 2000 gave way to fresh fears that rising interest rates could hammer highflying shares. The declines, while modest compared with many markets' gains in 1999, nonetheless raised questions about the potential for heavier selling if more investors rush to cash out--though many experts said it was too early to predict a deeper slide.

Federal Reserve Chairman Alan Greenspan warned Congress on Tuesday that corporate scandals threaten to injure the nation's slowly mending economy and should be treated with stiff new penalties for executives who cheat. Within hours, a Republican-controlled House dropped its previous reluctance and rushed to join the Democrat-controlled Senate in substantially increasing jail time for securities fraud and corporate misconduct.

Even the maestro didn't see it coming. Former Federal Reserve Chairman Alan Greenspan has acknowledged that he failed to recognize early on that an explosion of sub-prime mortgages to people with questionable credit histories or low incomes could pose a danger to the economy. In an interview, Greenspan said he was aware of lending practices in which home buyers got very low initial rates only to see them jacked up later, causing payment shock in some cases.

Manuel H. Johnson, vice chairman of the Federal Reserve, announced Thursday that he will resign to return to academic life, indicating that he expects Fed Chairman Alan Greenspan to be reappointed to another four-year term next year. As a top policy-maker at the Federal Reserve, Johnson played a key role in directing U.S. monetary affairs during the last four years.

Remember October, 1973? Alan Greenspan does, and as current chairman of the Federal Reserve, he's determined not to let history repeat itself. Seventeen years ago, in a situation eerily like today's, war was breaking out in the Middle East. An Arab oil embargo triggered unprecedented worldwide fuel shortages and a huge jump in energy prices. The Federal Reserve, worried that the oil shock might bring on a recession, cut interest rates and eased credit.